Ben12345

Hi guys, 

Hoping someone can help. 

Is it possible for me to get a buy to let mortgage in the UK while i live in Australia?

I want to buy a property for my retired mother to live in and wondered if anyone has ever bought property before and what the max LTV is etc? What proof of earnings they look at from Oz?

Thanks for your help. 

On 11/09/2021 at 18:55, Canada2Australia said:

Not sure what go is in the UK, but in Canada people who are on the cusp of foreclosure with regards to mortgage payments have an option with something call 'Deed in Lieu of Foreclosure'. This option allows the mortgagor to hand over the Land Title of the property to the mortgagee in exchange for being forgiven of the mortgage debt. In essence, you turn over ownership of your property to the bank and walk away from all your property-related debt. The only thing you lose is the equity you payed into the property. There is also little to no effect on your credit rating for going this route, so you are not punished for doing so. End of story. It's a last resort but far better than going through foreclosure or bankruptcy. 

If the UK has this option and it works similarly to how it works in Canada, you should seriously consider going that route if you are in that bad of a situation.

That’s the problem. There’s no equity in there so I doubt they would allow this. They would lose money. 

On 11/09/2021 at 12:46, Ken said:

You can only claim the interest portion of the mortgage payment and not the capital repayment, but if it's interest only then 100% of the mortgage payment is interest.

Note however this does only apply for mortgages for the purchase of an investment property. If you took out a new mortgage for an equity release then only the interest on the amount you spent on improvements to the investment property (or to repay the balance on the original loan for the purchase) would be allowable and not the interest on any amount you pocketed.

Note also that these are the rules in Australia. The UK has far stricter rules that restrict the amount you can claim both to the amount of income you are receiving and to the basic level of income tax.

Note that any claim for depreciation will eventually cause you to have a larger gain for CGT purposes when/if the investment property is sold, but provided the 50% discount on the gain remains in place you should still be better off overall.

Thanks Ken. I bought the property to live in initially so does that mean I wouldn’t be able to claim on it? 

10 hours ago, Marisawright said:

You are absolutely right.  I meant to say I don't know how depreciation tax works in the UK.  I'm very familiar with how to claim depreciation on your tax in Australia.  I was the same as you - thanks to depreciation, I paid absolutely no tax on the income from my rental property and even got a few thousand dollars lopped off my PAYE tax.

If, as Ken says, it's "safe" for @Ben12345to claim landlord's expenses on his Australian tax return, it could make a massive difference.  He could claim 100% of the mortgage payment because it's interest-only, and get a depreciation report done on the property so he can claim depreciation too. 

How can you claim 100% if it’s interest only? In the past I was told I could only claim on the different between the rental income and the mortgage payment and any home Improvements.  

On 29/08/2021 at 11:41, Marisawright said:

The first thing to check is whether overpayments will reduce the principal.   If they do, then it's worth doing, because that will also cut your interest payments for the future and reduce the burden.  

 Let's say you're paying 5% interest on the mortgage and you've got $20,000 here, earning 3% interest.  That means you're making a loss of 2% on those savings, compared to if you paid it into the mortgage.   And that's not taking into account the fact that it's compound interest.

The downside, of course, is that you may not be able to withdraw the money if you need it. 

https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/#

Yea I can overpay as much as I want to reduce the principle. That’s a good point about the interest, its 4.38. variable. I was told by an accountant to not over pay and keep my saving and try to get depreciation tax on it but I don’t think that would make me better off. 

13 hours ago, Tulip1 said:

That’s a big shortfall.  Changing to repayment won’t be easy as you’ll have to prove affordability.  They may smell a rat when your payslips/tax returns/outgoings are from Australia!  Maybe just do overpayments.

Yea I’d just overpay. I just checked and there’s actually 20 years left on the secured amount and 14 on the unsecured. Painful how long it is, not sure if it’s worth trying to pay it off earlier or saving my cash here. Might be worth speaking to a financial advisor. 

1 minute ago, Lavers said:

Not to sure if they contact your lender or not but just ask to makesure.

No nothing to pay upfront so a no win no fee basis just like ppi claims.

Nothing to lose so if it comes off then brilliant, if nothing happens then so be it.

 

Thanks mate. 

If I was to sell I’d be paying approx $700 per month on 30k shortfall. Prob best I keep renting as I’ve been ok the last 8 years. It’s currently on IO but I’ll change it to repayment and just pay it off. Rental income covers about 80% of the MRP.

58 minutes ago, newjez said:

The stamp duty freeze is coming to an end in the UK, so I would expect prices to calm down.

Find it hard to believe that a property is still in negative equity after all this time. Has the OP had it valued recently?

The market in the north east hasn’t moved from what I’ve seen and yea had it valued recently. 

20 minutes ago, Lavers said:

Yeah mine went to NRAM after northern rock folded, left me stuck paying 5% and couldn't move because like you I bought right before the crash.

Luckily my house made money and I could settle up before moving out here last year.

They seem to think there's a case but how long it takes is anyone's guess. I first registered maybe last May and the last update was maybe a month or so ago.

They take a cut but there's nothing to lose and there was no reason for us to be stuck paying such high interest rates.

They are saying that we should have been paying the same interest rates offered at other banks so are going after the overpayment, which could be a nice sum.

I've also done a claim on my diesel car as they emailed me about that haha.

 

That would be nice! Lucky yours made some equity, I thought mine would have risen a bit in 8 years. So you don’t need to pay anything upfront? Thing is if I contact them then lender might find out I’m in Oz which I don’t want. 

2 minutes ago, Lavers said:

Hi Ben 

Was the mortgage with Northern Rock? If so I was with them and there is a lawsuit going on because we where all trapped paying high interest rates.

Have a look at harkus Parker law firm in the UK and register your details

Yes it was then they changed to NRAM. That’s great, how long has that been going on and what have they advised? I’ll have a look. Cheers. 

2 minutes ago, Parley said:

14 years will go by quickly enough and then you will at least own an asset. It may have a growth spurt in the future too.

But on the other hand if you can sell it yourself and move on then that could be worth it too if you can use the money you are paying more productively.

It’s one of those deadly together mortgages so not a chance I can sell it. Yea you’re probably right. Thanks for the advice everyone! 

2 hours ago, Marisawright said:

Yes, it can happen and not worth the risk IMO.   Is the property in a decent enough state to rent it out?  

I rent it out but the lender won’t give consent so I do it on the side. Worrying if they ever found out. Don’t have any choice. Got the property just before GFC so it’s 20k Gbp In negative equity and all the repairs add up. Another 14 years left to pay and the prices have never risen in the last 8 years. Im what is called a mortgage prisoner over there. Suppose I’ll just have to live with it. 

Hi not sure if anyone can help but I am a citizen of Australia and have a property in the uk that I am stuck with as it’s in negative equity and I can’t sell it. I’m thinking of stopping paying the mortgage and letting it get repossessed but worried if I will be chased the money owed here in Oz, can that happen? Thanks.